In this study, the feed-in tariff (FIT) scheme was considered to facilitate an effective introduction of renewable energy in the Kingdom of Bahrain. An economic model was developed for the estimation of feasible FIT rates for photovoltaic (PV) electricity on a residential scale. The calculations of FIT rates were based mainly on the local solar radiation, the cost of a grid-connected PV system, the operation and maintenance cost, and the provided financial support. The net present value and internal rate of return methods were selected for model evaluation with the guide of simple payback period to determine the cost of energy and feasible FIT rates under several scenarios involving different capital rebate percentages, loan down payment percentages, and PV system costs. Moreover, to capitalise on the FIT benefits, its impact on the stakeholders beyond the households was investigated in terms of natural gas savings, emissions cutback, job creation, and PV-electricity contribution towards the energy demand growth. The study recommended the introduction of the FIT scheme in the Kingdom of Bahrain due to its considerable benefits through a setup where each household would purchase the PV system through a loan, with the government and the electricity customers sharing the FIT cost. © 2017 Informa UK Limited, trading as Taylor & Francis Group.

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